v. Contreras et al

Filing 34

MEMORANDUM OPINION AND ORDER. Signed by Judge Harry Lee Hudspeth. (tm)

Download PDF
FUED IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS RAYMOND A. CONTRERAS, UCT,-.i ZOt ' § § § Plaintiff. v. AT&T SERVICES, INC. AND AT&T PENSION BENEFIT PLAN, Defendants. fr!rERK BY § § § § § § § No. 4srcu SA-1O--CA-846-H MEMORANDUM OPINION AND ORDER This is a civil action under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § Both parties have 1132. filed motions for summary judgment. Having reviewed the motions and the responses, Court finds that Defendants the judgment in their favor as I. a are entitled to matter of law. INTRODUCTION The following facts are established by the administrative record: Plaintiff was employed by Southwestern Bell Telephone Company (SWBT) from July 25, 1982 until June 24, 1988. He was then employed by Pac Bell Directory October 11, 1994. (Pac Bell) from July 6, 1988 until SWBT and Pac Bell were covered by a Mandatory Portability Agreement (MPT) that allowed for mutual recognition of pension benefits among eligible employees of companies formed as a result of the break up of American Telephone Pursuant to the MPT, Bell's pension plan & Telegraph in 1984. Plaintiff ported his service with SWBT to Pac the Pacific Telesis Group Pension Plan -1- (Pac Bell Plan) When his employment with Pac Bell ended, he received a . Pac Bell from the lump-sum distribution Plan in amount the of $32, 464. 12. On January Bell Yellow received 1996 Plaintiff went to work for Southwestern 2, Pages) (Yellow Pages . Four months Plaintiff later, letter from Yellow Pages' plan administrator, a to port indicating that he was eligible Investments, Fidelity his prior service under the Pac Bell Plan into the Yellow Pages' plan, had an option to waive portability if he desired ATTPBP 16) letter the Attached to . was an (Def. but B at Ex. explanation of his portability options. After reviewing the letter, Plaintiff declined to waive portability (Def. Plaintiff benefits requested and 2006 October, in B at Ex. ATTPBP 19) received and estimates December, 2006. of his pension Both estimates calculated his benefit estimate using his initial hire date with SWBT July 25, entitled to a 1982 and both estimates stated that he would be lump-sum distribution of over $500,000 (Def. Ex. B at ATTPBP 185-86, 191-92) . January, In Yellow Pages and requested a 2007 Plaintiff retired with lump-sum distribution of his pension benefits. On March 14, from the plan 2007, Contreras claims that he received administrator notifying him that the a call final calculation of his lump-sum pension payment was $219,808.60 (Def. Ex. B at ATTPBP 46) . This amount was calculated using his initial -2- employment date with Yellow Pages - January 1996 2, rather than his initial employment date with SWBT. Plaintiff initiated 24, 2008. Ex. (Def. a formal claim with Fidelity on January B at ATTPBP 43-46) . he requested that In it, his pension benefit be calculated using his initial hire date with SWBT Ex. (Def. argued, B at ATTPBP 46) His . should be accounted for by subtracting the amount of the payout from his pension benefit for 24 years of service B at he lump-sum payout, 1995 ATTPBP 46) . at ATTPBP 49-53). Pension Benefit His claim was denied on July 3, (Def. 2008 (Def. Ex. B Ex. In the denial, citing Section 8.2.3(c) of the SBC Bargained Program Plan (the Plan), Fidelity concluded that Plaintiff was not entitled to credit for his service before 1996 because he had received a lump-sum payout and had not returned it, as is required by the plan (DeL Ex. B at ATTPBP 50) Plaintiff appealed the decision to the Benefit Plan Committee on August 8, his appeal 2008 (Def. Ex. on March 25, B at ATTPBP 1-4) . The Committee denied concluding that repayment 2009, of his distribution under the Pac Bell Plan was required if he desired to have his prior Pac Bell service calculating his pension benefit recognized (Def. Ex. B at for purposes ATTPBP 1-4) . of The committee concluded that, although the mistaken estimates did not alter the benefit plan, Plaintiff should be given the option to reinstate his employment (Def. Ex. B at ATTPBP 4) the offer. This completed the appeal process. -3- . Plaintiff declined APPLICABLE LAW II. When a plan grants an administrator discretion to construe the terms of the plan, required to apply an abuse Court is the of discretion standard. Sanders v. Unum Life Ins. Co. Of Am., 553 F.3d 925 922, (5th Cir. 2008) Here, the plan delegates authority to the . Fidelity Services Center to determine initial claims and to the Benefit Plan Committee to decide appeals so the abuse of discretion at standard applies (SBC Pension Benefit Plan, Def. Ex. C 9) The Court employs a two-step approach in determining whether an administrator's Gosselink v. American Tel. 2001) was interpretation an abuse of discretion. (5th Tel., Inc., 272 F.3d 722, 726 & Cir. Under this approach, the Court must first determine whether . the administrator's interpretation of the plan was legally correct. Id. In determining whether the interpretation is legally correct, the Court must consider plan a uniform (1) whether the administrator has given the construction; interpretation is consistent with (3) any whether (2) interpretations of the plan. from resulting If the Id. administrator's fair reading of the plan; and a costs unanticipated the different Court concludes that the administrator's interpretation is not legally correct, it must then determine whether the administrator abused its discretion. Id. In determining abuse of discretion, the court must consider internal consistency interpretation; (2) of any the plan relevant -4- under the regulations (1) the administrator's formulated by the appropriate administrative agencies; and the factual background (3) of the determination and any inference of lack of good faith. underlying findings Factual claim a decision are Id. always reviewed under an abuse of discretion standard. Love v. Dell Inc., (5th 551 F.3d 333, 336 Cir. 2008) . The abuse of discretion standard requires the Court to determine whether the administrator's factual findings were "arbitrary and capricious." Id. An administrator's findings of fact are arbitrary and capricious when there is not a "rational connection between the known facts and the decision or between the found facts and the evidence." Bellaire Gen. Hosp. v. Blue Cross Blue Shield of Mich., An administrator's decision to 97 F.3d 822, (5th 828 must deny benefits Cir. 1996). based on be evidence that clearly supports the basis for denial. Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, (5th 299 1999). Cir. III. ANALYSIS Because discretion findings the Plan vests determining in using an abuse in coverage, of Benefit the the Court will standard. discretion Committee Plan review The its parties disagree primarily about whether the Plan requires that an employee who was previously employed by an MPA Interchange Company, and who received lump-sum a employment, return service prior to his the distribution upon distribution in distribution to calculation. -5- termination order count for toward his his of years his of pension Section 8.2.3(a) of the Plan provides: If a Covered Employee receives a lump sum distribution under Subsection 6.14 or Paragraph 10.4.8 of the SBCPBP-Nonbargained Program and is subsequently employed by an MPA Interchange Company, such Covered Employee may repay to the Pension Fund within one year after the date he begins such MPA Interchange Company employment, the total amount of the lump sum distribution, plus interest. Ex. (Def. C at 83) . Section 8.2.3 (c) provides: any Covered Employee is employed by an SBC MPA Company after terminating employment with an MPA Interchange Company and subsequent to receipt of a lump sum distribution of his accumulated benefit under such MPA Interchange Company's Pension Plan, the portion of such Covered Employee's Pension Service Credit constituting benefit accrual service shall not be recognized under the Plan unless and until such Covered Employee repays such lump sum distribution to such MPA Interchange Company Pension Plan in accordance with the terms and conditions of and within the time period provided in such plan and not until the assets associated with such repayment have been transferred to the SBCPBP and the Pension Fund. If Ex. (Def. C at 83) . Fidelity, in its claim denial, and the Benefit Plan Committee, in its appeal denial, relied on these provisions to conclude that Plaintiff was ineligible to use his pre-1994 service in calculating his pension benefit because he had failed to repay the lump sum distribution he received in 1995 0050) . The administrator's before Court must B at 0004, whether was it whether consider first interpretation of the determining Gosse].ink, Ex. contends that this conclusion was an abuse Plaintiff discretion. (Def. plan was an abuse legally of of the correct discretion. 272 F.3d at 726. Because Plaintiff does not claim that the administrator's construction of the Plan is not uniform, and because unanticipated costs are not at issue, the Court will focus S solely on whether the administrator's interpretation is consistent with a fair reading of the plan. Id. The Plan A. Plaintiff first argues that the administrator erred by either misinterpreting Plan provisions or failing to recognize ambiguities in the Plan. He cites various sections governing claim distribution that do not require repayment of lump sum distributions and argues that reading of inconsistent with the administrator's they are Section 8.2.3. Pension Calculation claims also He Service that the Plan's (Calculation definitions Service) of Pension and Eligibility Service (Eligibility Service) are inconsistent with one another and render the Plan ambiguous. "Pension Calculation Service" is the period of employment used to determine amount the of Participant's a (Definitions and Rules for Crediting Service, provides 2.63.4 Section provision of Plan," the Def. Ex. "[n]otwithstanding that, benefits pension D at any 12) other Calculation Service does Pension not include periods of employment with an Interchange Company "if the Covered pension benefit lump received Employee has . . . lump a sum distribution of his and the Eligible Employee has not repaid the sum distribution" (Def. Ex. D at 12) . "Pension Eligibility Service" is the period of employment used to determine eligibility for pension benefits (Def. Ex. D at 13) provides that Pension Eligibility -7- . Section 2.64.1 of the Plan Service includes periods of employment at Interchange Company "notwithstanding the repayment a of any lump sum distribution made to such Covered Employee" (Def. Ex. D at 13) create a Plaintiff argues that these definitions conflict and . substantial ambiguity. Plaintiff does not produce a reason, and the Court can think of none, that two different terms having different definitions should be considered an ambiguity. That Plaintiff's employment before 1994 is part of his Eligibility Service is qualifies not disputed. as What is in dispute is whether it also Calculation Service. That Eligibility Service inclusion does not require repayment of earlier payouts does not make the definition of Calculation Service ambiguous. Plaintiff also argues that the administrator's interpretation of the plan was 3.5, incorrect because it ignored Sections 3.2.3(b), 4.1.1 and 6.1.3(a), which he claims contradict Section 8.2.3 because they do not require repayment of lump sum pension payouts. Section 3.2.3(b) provides that "[n]otwithstanding any other provision of this Section 3," an absence of over six months "shall not be a break in his Calculation Service, Pension Eligibility Service and Pension or Pension Eligibility Service only, as applicable" if the employee works for five years after returning. Plaintiff argues that because this "bridging" rule does not require repayment of any pension benefits received during the absence, his accrued Calculation Service was automatically "bridged" after five years. The administrator, therefore, : incorrectly interpreted the Plan when it determined that repayment was required for his prior service to be included in Calculation Service. The Court finds this argument unpersuasive. Section 2.63.4 defines Calculation Service as excluding service for which a lump sum pension payment has been received and not returned (Def. Ex. D at 12) . While the bridging rule does apply whether or not there has been an unreturned payout (and, in fact, undisputedly the Service), Eligibility include has applied been employment period Plaintiff's to Plaintiff seeks to Calculation Service is explicitly excluded from the as definition of Calculation Service by the Plan (Def. Ex. D at 12) Section 3.5 prohibits reductions in determinations of pension benefits over time (def. Ex. D at 24) how this applies provision to . Plaintiff does not specify him why or application its contradicts the administrator's findings. At issue in this case is whether the administrator miscalculated Plaintiff's pension amount by failing to recognize prior years of service. Because there is no that indication there was a reduction in benefit amount, the administrator's failure to apply Section 3.5 in Plaintiff's favor was not inconsistent with a fair reading of the Plan. Section 4.1.1 is a provision governing Eligibility Service and "Years of Vesting Service" accrued prior to January Ex. D at 26) arguments . 1, 1984 (Def. Nothing in the language of the Plan or in Plaintiff's indicates that Section 4.1.1 applies to Calculation Service. Neither Plaintiff's Eligibility Service nor his Years of Vesting Service are at issue in this case. Not applying this rule to require calculate Defendant Plaintiff's use to pension benefit was not his service to pre-payout inconsistent with a fair reading of the Plan. Section Agreement Portability Agreement (Def. Ex. provides 6.1.2(a) and (MPA) where that, the D at 143) the Divestiture could apply to an employee, (DIA) both Mandatory Interchange the DIA will apply Plaintiff does not argue that he is covered by . the DIA or present any evidence of how the DIA might change his benefit calculation. The Court cannot conclude, based only on the existence this of administrator's the that rule, decision was legally incorrect. B. ERISA The Summary Plan Description administrators plan requires to provide their participants with an accurate and comprehensive summary of their benefit plan. (SPD) 29 U.S.C. § 1022(a). The Summary Plan Description is intended to simplify the language of a plan, allowing the average participant to understand his rights and duties. Fallo v. Piccadilly Cafeterias, Because it is merely plan, a Inc., F.3d 580, 141 583 (5th Cir. 1998). summary and cannot contain every term of a omission of certain terms from the SPD will not alter the governing plan. Id. at 584 n.20. If, however, the terms of the SPD conflict with the plan, the SPD controls. Id. at 583-84. Ambiguities in the SPD are resolved in favor of the participant. -10- Id. at 584. argues Plaintiff that decision administrator's the was incorrect because the SPD and the Plan are inconsistent. The SPD defines the term "Net Credited Service" as having the same meaning as Pension Eligibility Service and Pension Calculation Service it any SBC employee's "an is period continuous of employment in Company while that company participates in this Plan" (Summary Plan Description, Def. Ex. E at 22) It states that the term "may also . include service with an Interchange Company" Plaintiff contends that the (Def. definition SPD's of S at 22) Ex. Net Credited Service gives Pension Eligibility Service and Pension Calculation Service the same meaning. Consequently, it conflicts with the Plan, which gives Pension Eligibility Service and Pension Calculation Service different definitions. Because of this conflict, Plaintiff the SPD, argues, rather than the Plan, should govern his benefit eligibility. The administrator's interpretation of the Plan was an abuse of discretion, Plaintiff because contends, the SPD exclusively uses the term "Net Credited Service" when discussing benefit calculations and defines Net Credited Service to include service at an Interchange Company. The Court and the Plan finds this argument unpersuasive. together reveals that there is Reading the SPD no inconsistency between the documents. While the SPD does omit the details of when a former Interchange Company employee's service will count toward -11- this omission does not alter the Plan. Fallo, his pension amount, 141 F.3d at 584 n.20. Importantly, the SPD never represents that prior service at an Interchange Company will be included in Net Credited Service. Rather, it provides that Net Credited Service includes periods of continuous employment with a SBC Company and may include service with an Interchange Company the Furthermore, SPD does not provide that (Def. Ex. E at 22) Pension Eligibility Service and Pension Calculation Service have the same meaning in the Plan, but that the term "Net Credited Service" encompasses both terms (Def. Ex. E at 22) . section explaining transfer of In the benefits from an Interchange Company, the SPD urges employees to contact the Benefit Organization "regarding special rules that may apply to [them]" (Def. Ex. Interchange Agreements, E at 17). the SPD In discussing coverage under indicates that service with an Interchange Company "may be recognized as Net Credited Service depending upon the agreement and your personal situation" (Def. Ex. E at (emphasis added) 19) While it is true that when an SPD conflicts with a plan, the SPD will govern a participant's benefit eligibility, the same does not apply when an SPD is silent. Fallo, A summary, by definition, thing it summarizes. will not 141 F.3d at 583, 84 N.20. contain every detail of the The SPD indicates that Net Credited Service may include service at an Interchange Company, but that transfer of such service is governed by special -12- rules and depends on the participant's individual situation. While the SPD does not outline the governing rules transfer pension of benefits from an Interchange Company, none of its representations are inconsistent with the Plan. Because there is no inconsistency between the SPD and the Court the Plan, finds that administrator's the interpretation was not legally incorrect. C. The Explanation of Waiver of Portability Conflict with the Plan i. Plaintiff next claims that the administrator's interpretation of the Plan contrary is to Explanation the of Waiver of Portability, a document he claims to be an official plan document. The Explanation of Waiver and Portability is a two-page document Defendants sent to Plaintiff in 1996, informing him that he was eligible to port his Pac Bell service consequences of waiving portability. explaining and the Plaintiff claims that the document contradicts the plan because it permits an offset of any lump sum document, pension payout the terms of and, because this document it is an official plan should control wherever it conflicts with the Plan. Defendants counter that the Explanation of Waiver is not an official plan document, but rather an illustrative document meant only to explain portability to participants. Plaintiff offers two arguments in support of his assertion that this document is an official plan document. First, he claims that Defendants conceded that it was a plan -13- Sullivan v. document in AT & T, Inc., 2010 WL 905567 (N.D. Tex). Nothing in Sullivan even indicates that the document at issue in that was same case the document discussed in document Sullivan issue at had here. different a In fact, "Special title: Notice Regarding Portability." Sullivan, 2010 WL 905567 at district court only references the Special Notice the *3 The Regarding Portability in answering the plaintiff's charge that he had not knowingly or voluntarily executed the waiver. Id. at *3 Nowhere does the district court indicate that the document at issue was official or binding on Defendants. Plaintiff's only other argument that the Explanation of Waiver is binding against Defendants of Waiver of Portability Document,' Defendants instructions" (P1. 453 a (5th Cir. 2007), a may not be an should certain[ly] Resp., proposition, he cites "a]lthough the Explanation is that Doc. 30 at actual Summary be bound by their 13). In Washington v. Murphy Oil support USA, Inc., of Plan own this 497 F.3d case holding that an SPD is binding against defendant when it contradicts the provisions in the benefit plan (Doc. 30 at 13) . Plaintiff's argument is directly opposed to the Fifth Circuit's holding in Hicks that, "[hf a document is to be Which it certainly is not. Hicks v. Fleming Co. Inc., 561 F.2d 537 held that a document qualifies as an SPD if it contains all or substantially all categories of information required under 29 U.S.C. § 1022(b) and the Department of Labor's regulations at 29 C.F.R. § 2520.102-3. Hicks, 561 F.2d at 542. Plaintiff cannot in good faith contend that this two-page document even approaches this standard. -14- afforded the legal effects of an SPD, such as conferring benefits when it is at variance with the plan itself, that document should be sufficient to constitute an SPD for filing and qualification purposes." Hicks, F.2d at 542. 961 Plaintiff asks this Court to give a two-page explanatory document the same legal effect as an Because SPD. Plaintiff show cannot that this document meets substantially all of the requirements of an SPD, the Court finds that the administrator's failure to give any alleged variance legal effect was legally correct. ii. ERISA-Estoppel Plaintiff also claims that he detrimentally relied on the representations in the Explanation of Waiver. The Explanation of Waiver states that if a participant retains any lump sum payout for prior service, that service will not be used in calculating pension amount (Def Ex. B at ATTPBP 17) . employee terminates his employment It also explains after bridging, that, 17) . Plaintiff claims that he relied on an any lump-sum payout will be offset against his pension benefit (Def. Ex. ATTPBP if the B at paragraph discussing offset in deciding not to waive portability. Because of this, he claims, Defendants should be bound by their purported representations that an offset would be used to calculate pension benefits. To establish an ERISA-estoppel claim, (1) a material misrepresentation; -15- (2) a plaintiff must show reasonable and detrimental reliance; and (3) extraordinary circumstances. Mello v. Sara Lee (5th 44445 431 F.3d 440, Corp., Cir. 2005). Because Plaintiff has failed to show that his reliance was reasonable or detrimental, his claim fails and this Court need not address the other elements of ERISA-estoppel. As preliminary a detrimental Plaintiff matter, reliance. He only argues not does that allege even relied he the on Explanation of Waiver in his decision to port his prior service into the Plan his service (P1. Resp., resulted Doc. # his in 30 at 11). prior His decision to port service being used for determining his eligibility for pension benefits. Had he decided not to port his service, as he seems to indicate he would have done if the Explanation of Waiver had not been misleading, he would have been in no better position than he is now. The only difference would be that, in that situation, his prior service would not have been used to determine pension eligibility or his pension his amount. Even assuming Plaintiff's claim that he would could fail Explanation of Waiver would not unambiguously requires return detrimental show because have been of any reliance any reasonable. lump-sum reliance, the on The Plan payout as a prerequisite for bridged service to be used for pension calculation purposes. Plaintiff does not argue that he relied on the Explanation of Waiver to interpret an ambiguous provision in the -16- Rather, Plan. an informal ERISA's document policy precludes a contradicted unambiguous that against modification informal Plan plan of terms. terms finding that any such reliance was reasonable. Fifth The 445. he argues that it was reasonable for him to rely on Circuit has held that reliance on an Id. at informal document in the face of unambiguous Plan terms is not reasonable. Id. at because 447. he Consequently, cannot show Plaintiff's ERISA-estoppel claim fails that reliance his was reasonable or detrimental. The Term of Employment Summary D. Plaintiff's final Summary sent to him because it argument is 1996 in contradicts the that Plan, Employment official plan document and, an is the Term of is binding on Defendants. He claims that the administrator abused its discretion when it found that Plaintiff was notified of the effect of his failure to repay the 1995 payout in His 1996. a Term of Employment Summary sent to him in notification notification language likely the result of is is doubtful, in mysterious he font and, the Court no therefore, the is modification. This argument is completely without merit. offers because claims, reason why it letter the same legal effect as a Plaintiff First, should afford this one-page Summary Plan Document. Second, Plaintiff ignores that the administrator, in determining the facts, considered his own testimony that -17- he had received a Term of 4 Employment Summary containing the "mysterious" language notifying him that his previous service would not be used to calculate his pension amount (Def. Ex. B ATTPBP at 58) The . conclusion that Plaintiff did receive the "mysterious" Term of Employment Summary was not an abuse of discretion there is a clear rational connection between the finding that he received the document and his testimony that he had received it. See Bellaire Gen. Eosp., 97 F.3d at 299. IV. CONCLUSION Because Plaintiff cannot show that the administrator abused its discretion in declining to calculate his pension amount using his bridged service, summary judgment will be entered in favor of Defendants. It is therefore ORDERED that Plaintiff's claim for legal and equitable relief pursuant to 29 U.S.C. is hereby, It is § 1132 (a) (1) (3) and it be, DENIED. further ORDERED that ENTERED in favor of Defendant, judgment be, and it is hereby, and the Plaintiff take nothing by his suit. zk SIGNED AND ENTERED THIS day of October, 2011. 1 HALEE HUDSPETH SNIOR UN1TD STATES ( DISTRIOtT JUDGE

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?